What’s on your compliance wish list?

What’s on your compliance wish list?

Compliance leaders seek clarification, management buy-in, and more.

November 13, 2019

‘Twas the night before an examination, when all through the credit union, not a creature was stirring, not even the marketing department.

The reports were all printed and presented with care, in hopes the examiner soon would be there.

Board members nestled all snug in their beds, while visions of board-approved policies danced in their heads…

As we look ahead to the end of 2019 (and the holiday season) and prepare for 2020, CUNA’s compliance department asked members of the CUNA Compliance Community one question: “If we could grant one wish to make your day-to-day life easier as a compliance officer, what would it be?”

Further guidance on a specific reg? More support from your CEO? An internal compliance committee?

The responses we received were wide and varied. Some were based around easing a specific regulation’s requirements while others were a bit more all-encompassing with their answer.

‘If we could grant one wish to make your life easier as a compliance officer, what would it be?’

Here’s their wish list:

• Changes to CECL (current expected credit loss). Dropping the requirement for credit unions with less than $1 billion dollars in assets.

• An easier way to find state regulations that pertain to state-chartered credit unions.

• A “sliding scale” of compliance examples in training materials. These include examples of what’s contrary to the law, which might be debatable, and best practices.

• A better understanding among credit union staff that credit unions operate in a unique regulatory environment with many requirements that simply are not optional.

• Further Military Lending Act (MLA) guidance. Question No. 2 of the Defense Department’s December MLA Interpretive Rule provides that the sale of GAP or credit insurance causes the loan to lose its exemption from the MLA rule.

Therefore, when an automobile dealer provides a loan to a covered borrower and finances GAP or credit insurance, paragraph (f) would prohibit the dealer from taking a security interest in the vehicle and the loan would be unsecured.

Because of this carve-out, credit unions with indirect dealer relationships may close covered loans in-house (using the credit union’s MLA-compliant loan documents, checking the servicemembers active duty status, and ensuring the MAPR doesn’t exceed 36%).

They may also retain the vehicle title as security for the loan even when the automobile dealer initiates the loan and finances GAP or credit insurance.

CUNA and other trade associations submitted letters asking the Defense Department to eliminate Question No. 2 immediately.

The agency has also been made aware of the serious problems, including harm to servicemembers, due to the GAP provision in Question No. 2. In early 2018, the Defense Department agreed to eliminate this question 2 from its Interpretive Rule, but we are still waiting for that to happen.

• Buy-in from management to implement a robust internal compliance management system.

 • Inclusion of the compliance department as a part of the management team.

• Quick training resources for supervisory committee and board members about the Bank Secrecy Act, Office of Foreign Assets Control, etc.

NEXT: Regulation E

Regulation E

Another wish list item that stands on its own: Regulation E provisions, specifically, its treatment of negligent consumer behavior.

Under the regulation, consumer behavior that may constitute negligence under state law, such as writing the personal identification number on a debit card or on a piece of paper kept with the card does not affect the consumer's liability for unauthorized transfers.

The extent of liability is determined solely by the consumer’s promptness in reporting the loss or theft of the debit card (or other access device).

Credit unions also find applying Reg E’s tiers of liability to be major challenge, to say the least, especially when timely notice is not given and multiple transactions are involved.

Lastly, many fraudsters are quite skilled in manipulating the rules, causing substantial losses to credit unions and other financial institutions. This is a major frustration for credit unions dealing with assertions of ATM/debit card fraud.

Want to add to this wish list? CUNA’s Compliance Community is the perfect place to share sample policies, tips, tricks, and anecdotes of what works and what doesn’t at your credit union.

It’s also the best place to stay up to date on finalized rules, amendments, and newly updated and released agency guidance through CUNA’s CompBlog, where CUNA’s compliance staff provide compliance-related updates.

JACKIE EKDAHL is a compliance project specialist at CUNA. Contact CUNA's compliance team at